Simone saw my Hapless Bicycle post and wrote me about this phenomenon, as encountered in Germany (and other northern European countries).
Behold a larval mass of the Eichenprozessionsspinner (that's Oak Processionary Moth to us English speakers, and Thaumetopoea processionea to you fancy-pantsy Latin speakers). These caterpillars, known as setae, are considered a plague from July to September, when they are in web-spinning mode. Not only are they a threat to the trees they infest, but if you look close enough to the photo below, you'll see that the little grubs are covered with fine hair. These hairs break off with little provocation and become airborne--and each one is covered with a poisonous irritant. As Simone puts it, a stroll through the woods Southwest Germany in August might result in:
Severe rashes of the skin known as "caterpillar dermatitis" and somtimes also quite persduring wheals. As the little hairs also float in the air, you breathe them in, which irritates the respiratory system, causing painful coughs, asthma and bronchitis.
Lovely. This caterpillar might beat out the Tomato Hornworm as my least favorite grub, and I haven't even encountered one.
Thanks for all the info,
Photo source: Wikipedia